The leasing sector has demonstrated resilience in the face of economic uncertainty, with business contract hire (BCH) and salary sacrifice driving growth, while private customers face challenges.

Business Contract Hire (BCH) Growth

BCH has seen significant growth, with a 6% increase in the last quarter of 2024, accounting for the majority of the BVRLA’s leasing fleet. BCH was also up 61% in the same period, with nearly nine-in-10 additions to the salary sacrifice fleet being for battery electric vehicles (BEVs).

BCH Fleet Composition

• BEVs accounted for 54% of all new BCH cars added to the BVRLA fleet in Q4 2024.
• Private buyers also adopted BEVs at a greater rate, with penetration among personal contract hire (PCH) agreements growing from 16% in Q4 2023 to 28% in Q4 2024.

Salary Sacrifice Growth

Salary sacrifice has also seen significant growth, with 100,000 vehicles added to the salsac fleet for the first time in Q4 2024, and potentially even higher due to some agreements being recorded as business contract hire.

Salary Sacrifice Impact

• Salary sacrifice has allowed thousands of employees to access an electric car who would otherwise have been unlikely to do so.
• Half of company car orders fully electric.

Van Volumes Down

Despite the growth in BCH and salary sacrifice, van volumes were down in the last quarter of 2024, with a 10.96% decline in vans on leasing company fleets. This reverses a longer-term trend that had seen light commercial vehicles (LCVs) represent a greater share of BVRLA members’ lease fleet.

Van Fleet Composition

Electric Vehicle Penetration

Electric vehicles are penetrating the market at a greater rate, with BEVs accounting for 16% of PCH agreements and 54% of BCH agreements in Q4 2024. This is supported by vehicle manufacturers introducing offers and financial incentives to help meet their zero emission vehicle (ZEV) Mandate targets.

Emissions Gap

• The gap between the emissions of business and private cars widened in the final quarter of 2024, with average emissions of new additions to the BCH fleet in Q4 2024 at just 43.7g/km.
• The average emissions of new additions to the PCH fleet in Q4 2024 were 103g/km.

Private Customer Challenges

Private customers are facing challenges, with a 13.4% decrease in vehicles on PCH agreements, and a 10% decrease in used car leasing in Q4 2024. Leasing companies have adapted used car leasing offerings to retain many customers and appeal to new segments.

Used Car Leasing Growth

• Used car leasing grew again in Q4 2024, up 8.5% on the previous quarter.
• Used vehicles accounted for 3.5% of PCH additions to the BVRLA leasing fleet, outperforming the overall fleet share of 1%.

Sector Resilience

The leasing sector remains resilient, with BVRLA chief executive Toby Poston stating that the adaptability and resilience of the sector is a positive sign. However, he also notes that the gaps between segments are widening, and that local and global economic uncertainty is causing many customers to hold fire.

Industry Insights

“Again we are seeing the adaptability and resilience of the sector,” said Poston. “Local and global economic uncertainty is causing many customers to hold fire but there remain pockets of optimism.”

Business Contract Hire (BCH): a type of leasing where a company leases a vehicle for a fixed period of time, typically 2-4 years.

Salary Sacrifice: a type of leasing where an employee sacrifices part of their salary in exchange for the use of a company car for a fixed period of time.

Zero Emission Vehicle (ZEV) Mandate: a government target to increase the number of zero emission vehicles on the road by a certain percentage.

Personal Contract Hire (PCH): a type of leasing where an individual leases a vehicle for a fixed period of time, typically 2-4 years.

Local and Global Economic Uncertainty: economic conditions that affect a region or the world at large, causing uncertainty and instability in the market.